[Insight & Opinion] Restricting Large Corporations from Public IT Projects Is Not the Answer

The recent administrative network paralysis incident exposes multiple technical and administrative issues. Faced with a crisis close to a national emergency, the responsible agencies seem to be looking for scapegoats rather than identifying fundamental problems themselves and preparing proper future measures. They are likely blaming server issues, software, security patches, network problems, and poor management by vendors through the hands of field workers. In such cases, vendors typically receive severe reprimands from the relevant ministries and then proceed to sign additional contracts for equipment reinforcement and service enhancement. This incident did not occur suddenly but is the result of long-standing practices that have accumulated and finally erupted.

Following the online class system crash developed during the COVID-19 period, the COVID reservation system failure, court network paralysis, and errors in the education administrative information system, the recent administrative network paralysis even caused the Minister of the Interior and Safety to return home while accompanying the President. This clearly indicates structural problems. Many experts diagnose that since 2013, when large corporations were restricted from participating in public IT projects, incapable small and medium-sized enterprises (SMEs) have been entrusted with the nation's key systems, repeatedly causing problems.

I have worked in the information services field for nearly 40 years, starting at a small IT company and ending my career as a president in charge of government and corporate projects at KT, so I can say I have a good understanding of Korea’s reality.

Exactly 10 years ago, through someone's arrangement, I visited the then Minister of the Interior and Safety directly to explain the unfairness and anticipated harm of restricting large corporations' participation in public IT projects. Of course, since it was already politically decided, it was like "preaching to deaf ears." Even now, restricting large corporations' participation in projects under the pretext of protecting and fostering SMEs in all fields should be reconsidered. That cannot be a policy of mutual growth. What should be restricted are "unfair acts by large corporations," not "large corporations" themselves.

Restrictions on large corporations’ participation in the IT sector are not particularly frustrating for large corporations. Similar to other fields, Korea’s public IT projects are generally loss-making businesses.

Due to the lack of technical skills among public officials and frequent job rotations, help from vendors beyond the contract scope is often needed during both the planning and completion stages of projects. However, SMEs, already operating with weak profitability, lack the capacity to provide satisfactory support. Large corporations, for the sake of their company image, have reluctantly met these demands. Additional support ultimately means money and is directly linked to the quality of the project. The increase in lawsuits surrounding IT projects reflects this reality. This system is actually a painful one even for the public officials in charge.

They say the system has been revised to allow SMEs to participate alongside large corporations in large-scale projects, but this was made without understanding the project execution process. Instead of simply requiring large corporations to involve SMEs to a certain extent, political (vote-calculation) reasons prevent lifting the restrictions on large corporations’ participation, so a workaround was used.

Restricting large corporations’ participation benefits neither large corporations nor SMEs, nor does it help the nation or consumers. The country can only move forward if it breaks away from the labor perspective, activist groups, and political views that mistake corporate, especially large corporate, activities as exploitative acts. Unfortunately, even conservative administrations that should control this are sympathizing with it out of electoral concerns.

Kim Hong-jin, CEO of Work Innovation Lab

This content was produced with the assistance of AI translation services.